Conquering Closing Costs in Florida 

A Comprehensive Guide for Homebuyers and Investors 

For those of you who may be buying a property in Florida, it is very important that you understand what the closing costs are before you make that all-important decision and sign that purchase contract. As with any smart investor, you would want to know every factor influencing your investment. Trust us, we’re here: gain this insight to understanding closing costs in Florida and how they impact your transaction. 

Let’s dive into the nitty-gritty of this important part of buying a house.

Unveiling the Mysteries of Closing Costs in Florida

Closing costs refer to those fees and expenses you pay while finalizing your real estate transaction. Though they may appear to be overwhelming, they are very easy to understand. You just have to be well informed and prepared.

The average closing costs in Florida typically range from 2-5% of your property’s purchase price. That means if you’re buying a $700,000 home, you could be looking at $14,000 to $35,000 in closing costs. The range is wide, and it will depend on the type of program you are using, the intended use of the property and sometimes your financial profile. 

A Breakdown of Essential Components

Let’s break down the components of closing costs so you know exactly what you’re dealing with:

Origination Charges 

These are fees charged by your lender and or mortgage broker for processing your mortgage application. The two most important ones are underwriting and processing fees.

In this section you will also see if applicable any loan discount points, which is basically points you pay in advance to get a lower interest rate. 

Services You Cannot Shop for 

These are fees and services contracted with a third-party services provider selected by the bank not by you. There are 4 main changes under this category: 

• Appraisal fee: This covers the cost of having a professional assessing the value of the property you’re buying
• Credit report fee: This fee is for pulling your credit report to assess your creditworthiness
• Flood Fee: is used to determine if the poetry is in a high-risk flood area, if that is the case you will also be required to buy flood insurance
• Tax Monitoring Fee: it is used by the lender to make sure you pay your property taxes on time every year. 

Services You Can Shop For 

This is fees and services with a third-party service provider which you may select. You are able to shop around different providers until finding the one that better suits your needs. The main fees you will find here:

• Survey fee: This covers the cost of having a surveyor determine the property’s boundaries
• Title insurance: This protects you and your lender against any claims or disputes regarding the property’s title
• Title search fee: This covers the cost of searching public records to ensure the property’s title is clear
• Title settlement fee: this the charge of the title company for facilitating and closing your transaction 

In this section you can also encounter other fees such as currier fee, endorsements, attorney fees, etc. 

Taxes and Other Government Fees 

• Recording fees: These are fees paid to the county to record the transfer of ownership
• Doc Stamp Tax:  this is the tax assessed when documents are recorded to transfer ownership and register the mortgage.

Pre-Paids 

More than closing costs, Prepaids are home expenses like taxes and insurance that you need to cover at the time of closing:   

• Homeowner’s insurance: Lenders will require to pay upfront 1 year of homeowners insurance to protect your property against damage or loss.
• Property taxes: This covers your share of property taxes for the year
• Prepaid interest: This covers the interest on your mortgage for the first month to give you time to prepare your first mortgage payment 

Average Closing Costs in Florida

The average closing costs in Florida vary depending on several factors, including:

• The purchase price of your home
• The type of loan you’re getting
• The lender you’re working with
• The location of the property

Factors Influencing Closing Costs

Property Value and Location: A Dynamic Duo

The price you paid for your house and where it is located are the most important factors in determining your closing costs. Generally, if a home to be purchased is more costly and is in an area where there is much competition, the closing costs are likely to be high.

Loan Type and Lender Policies: Navigating the Maze

Closing costs can also be impacted by the loan type you select. For instance, FHA loans are government-backed loans and will typically have their closing costs different from what conventional loans have. Also, policies on the part of the various lenders concerning closing costs could differ; therefore, it is very important to compare several lender offers.

Calculating Your Closing Costs

Harnessing the Power of Closing Cost Calculators

The best way to estimate your closing costs is to reach out to your mortgage broker and ask them to give you a fee worksheet with the details. Your lender will also provide you with a Loan Estimate that breaks down all the associated costs.

We can give you an estimate on your closing cost

However, another way to estimate your closing costs is to use a closing cost calculator. Several online calculators can help you get a ballpark figure based on your specific circumstances. 

Strategies to Reduce Closing Costs

Don’t be afraid to negotiate your closing costs. Many of these costs are negotiable, and you might be surprised at how much you can save by simply asking for a discount.

In some cases, you can negotiate with the seller to cover a portion of your closing costs. This is known as seller concessions.

Also, don’t settle for the first lender or service provider you come across. Shop around and compare offers to find the best deals on closing costs.

See our closing cost example below to get familiar with the terms we explained in this article. 

Frequently Asked Questions